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SBI Recurring Deposit ( RD ) Rates

Updated on Jan 22, 2018 - 12:52:13 PM

Build up your savings through regular monthly deposits of a fixed sum over a period of time with SBI’s Recurring Deposit. This is a great option for those who have fewer earnings as the monthly deposit amount is very less in State Bank of India.

SBI RD Interest Rates for different Investment Periods

Investment period

RD rates for regular deposit

RD rates for Senior Citizens

1 year to 455 days

6.90%

7.40%

456 days to 1 year 364 days

6.95%

7.45%

2 years to 2 years 364 days

6.85%

7.35%

3 years to 4 years 364 days

6.50%

7.00%

5 years to 10 years

6.50%

7.00%

SBI Recurring Deposit Interest Rates

SBI offers RD interest rates up to 6.95%

Interest on RD with SBI is compounded quarterly.

SBI accepts minimum deposits starting at Rs. 100.

For senior citizens, SBI offers RD rate up to 7.45%.

SBI Recurring Deposit: Special Features

Nomination facility is available so you can nominate your family members or spouse as the receiver of the final amount

Loan facility is available up to 90% of your RD amount. State Bank of India also allows you to take an overdraft on the RD amount

The deposit tenure ranges from 12 months to 120 months

The minimum amount can be deposited in multiples of Rs. 100

This service is available in every SBI bank branch. You can visit your nearest branch to start an RD account

TDS deductions are subject to the existing income tax rules as at the time of opening the RD account

A penalty in case of delay in payment of an installment of RD is Rs 1.50 for every Rs. 100, per month

SBI Recurring Deposit: Is it the best way to save?

Saving a specific amount of money every month can lead to a substantial rainy-day fund in the long term. Recurring Deposits are a good way of doing this. However, they are not the best saving option when your goal is wealth creation. Let’s say you plan on saving for your retirement. A Recurring Deposit with 6.95% interest rate may not give you the returns you need to create a retirement fund. However, depositing the same amount in a Mutual Fund as SIP (Systematic Investment Plan) can help you create the kind of wealth you are aiming for.

The Benefits of Investing in SIPs

You need to deposit a small amount of money every month or every quarter. The minimum amount can be as low as Rs. 500

Based on your budget and investment goal, your money will be invested in debt or equity funds. In the last 10 years, Equity Linked Mutual Funds have performed well in the market with a return of 12-22%. This is significantly higher than RD interest rates

There is no withdrawal penalty when you withdraw money from your SIP account. This means that SIPs have higher liquidity when compared to RD accounts which penalize users for premature withdrawal

Returns from SIPs which invest in Equity Linked Mutual Funds (ELSS) are exempt from tax. The gains from an RD is taxable.

SBI RD Eligibility Criteria

To open an account, one must be an Indian resident or a HUF (Hindu Undivided Families)

An NRI can also open the RD account through NRO and NRE accounts

If you are a minor, you can also open an RD account under the guardianship of your parents who will supervise the finances

SBI RD: Premature Withdrawal Rules

State Bank of India allows its users to prematurely withdraw money from their RD account. However, partial withdrawal of the amount is not allowed.

The bank will also charge a nominal amount as penalty for premature withdrawal. This will depend on the scheme chosen.

Tax benefits on SBI RD

All Recurring Deposits, including SBI Recurring Deposit, are taxable under the Income Tax Act 1961. The money that is invested in the RD will be included in your yearly income and a TDS (Tax Deducted at Source) of 10% is applicable on the interest earned (if it is more than RS. 10,000 per year). To save TDS on your RD gains, you can fill either Form 15G or Form 15H.

Conditions for submitting Form 15G:

You are an individual or HUF

You must be a Resident Indian

You should be less than 60 years old

Tax calculated on your Total Income is nil

The total interest income for the year is less than the minimum exemption limit for that year, which is Rs 2,50,000 for the financial year 2016-17

Conditions for submitting Form 15H:

You are an individual

You must be a Resident Indian

You are 60 years old or will be 60 years old during the year for which you are submitting the form

Tax calculated on your Total Income is nil

Documents Required to Open SBI RD Account

Proof of Identity

– Passport

– PAN card

– Voter ID card

– Driving license

– Government ID card

– Photo ration card

– Senior citizen ID card

Address proof

– Passport

– Telephone bill

– Electricity bill

– Bank Statement with Cheque

– Certificate/ ID card issued by Post office

Types of Recurring Deposit offered by SBI

State Bank of India offers two different types of Recurring Deposits. These are:

Regular Recurring Deposits: This type of RD account is generally opened by those who want to save some money. The tenure of this account can go up to 10 years, and the interest rate is fixed for the tenure. However, SBI Recurring Deposit interest rates can keep changing from time to time. So, make sure you start your RD account when the interest rates are high.

Holiday Savings Account: SBI, in partnership with the travel company Thomas Cook, allows its users to start a holiday savings account solely for the purpose of traveling. When a user chooses a holiday package from Thomas Cook, the cost of the package is divided into 12 monthly installments. You can even earn interest on your installment payments.

SBI Flexi Deposit Scheme: This is a unique type of RD in which users are allowed to change the amount of monthly installment amount according to their convenience. The minimum deposit should be Rs. 5,000 in one financial year and it can go up to a maximum of Rs. 50,000 per year.

RD Interest Rates in India

The RD interest rate in India varies from bank to bank and depends on the RD scheme chosen, the tenure, and the monthly deposit amount. Generally, banks offer higher rates when the RD tenure is above 15 months. Also, some banks may offer high RD interest rates for senior citizens and women.

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